Film companies sue Iowa over tax-credit program

Chris Rizo Nov. 3, 2009, 10:57am

Tom Miller (D)

DES MOINES, Iowa (Legal Newsline)-Five film companies are suing Iowa over the suspension of a tax credit aimed at wooing movie productions to the Hawkeye State.

Iowa Eye Entertainment LLC, Daedalus Film AG, C-Films France SAS, Clean Out Productions Inc. and Clean Out Film Services Inc. have sued the Iowa Department of Economic Development to make good on the promises made by the Iowa Department of Economic Development's Film, Television and Video Promotion Program.

The film companies say they were approved for $6.5 million in tax credits before the program was suspended last month by Gov. Chet Culver. The tax-credit program for filmmaking was suspended after an internal audit revealed abuses.

Under the program, filmmakers got a tax credit of up to 50 percent of what they spend to make a movie in Iowa. The program has paid about $32 million for 22 projects over the past three years.

The lawsuit was filed last week in Polk County District Court. It alleges breach of contract.

The companies said the program's suspension meant that they could not obtain a final contract to get financing to complete the film, "Clean Out," staring Timothy Dalton, Elliott Gould and Harvey Keitel. The project had been set for filming in September.

In court papers, the companies say they spent $3 million in preproduction costs.

Allegations of mismanagement of the tax credit program are under investigation by Attorney General Tom Miller's office.

In a letter last month to state officials, the governor outlined his concerns about the program.

"While there have been many reported benefits resulting from IDED's implementation of this program, our office very recently learned that there have been insufficient procedures in place to assure a full and accurate accounting of expenditures made to enable persons to qualify for tax credits under the program," the governor's letter said.

From Legal Newsline: Reach staff reporter Chris Rizo at

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